Don’t Leave Your Clients High and Dry During Your Succession

Clients are the lifeblood of a financial advisory practice. Yet when it comes time to an advisor’s succession, they often forget to include their clients in the equation. Finding the right successor to take care of your clients isn’t enough. You have to include your clients in your succession plans and communicate with them every step of the way. It’s a big part of closing out what we like to call your “Client Service Legacy.” When thinking about your succession and its impact on your clients we like to use what we call the “Grocery Store Test.” Imagine it’s a couple of years after your transition and you happen to run into one of your clients at the grocery store. Will they be happy to see you?

Or will they still have a bad taste in their mouth from how you retired without so much as a word and didn’t learn of your transition until they were suddenly contacted by a new advisor? An uncomfortable run in at the grocery store isn’t the only reason to communicate your succession plans to your clients. It also has a significant impact on attrition rates, which are often included in deal claw backs and can impact your final payout on your equity following the practice sale. Attrition rates during the transition is one of the biggest metrics we use to determine the success of the process.

In addition to communicating your succession plans, it’s also important to define your client service legacy so you can locate the right advisor to take the reins when you retire. There are many things to consider, such as finding a successor with a similar client service style and investment approach. Even finding an advisor who can offer more to your clients, such as a Virtual Family Office solution for business owner clients or estate planning strategies for clients with children with disabilities. Whomever you choose, they must be able to carry on the torch of your client service legacy in a way that honors your years of hard work and honors the needs of the client. Overall, it’s important to think about your clients every step of the way, even when looking at your own retirement.